Stock of the Day

March 1, 2022

Hershey (HSY)

$162.73
+$1.25 (+0.8%)
Market Cap: $32.72B

About Hershey

The Hershey Company, together with its subsidiaries, engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. The company operates through three segments: North America Confectionery, North America Salty Snacks, and International. It offers chocolate and non-chocolate confectionery products; gum and mint refreshment products, including mints, chewing gums, and bubble gums; protein bars; pantry items, such as baking ingredients, toppings, beverages, and sundae syrups; and snack items comprising spreads, bars, snack bites, mixes, popcorn, and pretzels. The company provides its products primarily under the Hershey's, Reese's, Kisses, Jolly Rancher, Almond Joy, Brookside, barkTHINS, Cadbury, Good & Plenty, Heath, Kit Kat, Payday, Rolo, Twizzlers, Whoppers, York, Ice Breakers, Breath Savers, Bubble Yum, Lily's, SkinnyPop, Pirates Booty, Dot's Homestyle Pretzels, and ONE Bar brands, as well as under the Pelon Pelo Rico, IO-IO, and Sofit brands. It markets and sells its products to wholesale distributors, chain grocery stores, mass merchandisers, chain drug stores, vending companies, wholesale clubs, convenience stores, dollar stores, concessionaires, and department stores. The company exports its products in approximately 80 countries worldwide. The Hershey Company was founded in 1894 and is headquartered in Hershey, Pennsylvania.

Hershey Bull Case

Here are some ways that investors could benefit from investing in The Hershey Company:

  • The Hershey Company recently reported earnings per share (EPS) of $2.09, exceeding analyst expectations, which indicates strong financial performance and potential for growth.
  • The company has a solid return on equity of approximately 44.77%, suggesting effective management and profitability relative to shareholder equity.
  • The current stock price is around $160, which may present a buying opportunity for investors looking for a stable investment in the consumer goods sector.
  • The Hershey Company has announced a quarterly dividend of $1.37 per share, reflecting a commitment to returning value to shareholders, with an annualized yield of about 3.39%.
  • Despite a year-over-year revenue decline, the company’s revenue for the latest quarter met analyst estimates, indicating resilience in a challenging market environment.

Hershey Bear Case

Investors should be bearish about investing in The Hershey Company for these reasons:

  • The company experienced a significant year-over-year revenue decline of 13.8%, which may raise concerns about its growth trajectory and market demand.
  • Insider selling activity, including a notable sale by the CEO, could signal a lack of confidence in the company's short-term performance.
  • The stock has a relatively high price-to-earnings (P/E) ratio of 14.75, which may suggest that it is overvalued compared to its earnings potential.
  • With a quick ratio of 0.64, The Hershey Company may face liquidity challenges, indicating potential difficulties in meeting short-term obligations.
  • Analysts have mixed ratings on the stock, with several reducing their price targets, which could indicate uncertainty about future performance.

The Top 3 Food Stocks to Buy Now

Written By Sean Sechler on 2/9/2022

The Top 3 Food Stocks to Buy Now

Hungry for Gains? Check Out These 3 Food Stocks

It’s no secret that inflation is causing some problems in both financial markets and the economy. This has led many investors to pursue adding defensive positions given the potential for further volatility. While it’s unclear how long this trend continues, it’s never a bad idea to consider adding shares of companies that offer stability and reliability to your portfolio for diversification purposes. One specific area of the consumer staples sector fits the bill – food companies.

Since people are always going to need to eat, these are businesses that see consistent demand for their products regardless of what’s happening to the economy. While it's true that some of these food products companies are facing pricing pressure thanks to inflation, many are navigating the issue well. There's also a chance that demand for food products is going to bounce back in a big way as people feel comfortable eating in public places again. Finally, the fact that more people are cooking and snacking at home now thanks to remote work and recently remodeled kitchens could benefit food stocks in a big way.

If that sounds appetizing, take a look at our list of the top 3 food stocks to buy now:

Tyson Foods Inc (NYSE: TSN)

First up is Tyson Foods, one of the world’s largest suppliers of beef, chicken, pork, and prepared foods. With iconic brands like Tyson, Jimmy Dean, Hillshire Farm, Ball Park, this company has created a strong position in the U.S. meat industry. Tyson also sells its products in countries like Australia, Canada, Central America, Chile, China, Mexico, and more, which means it has some international growth potential to consider. The stock is trading at all-time highs after the company reported impressive first-quarter results, including a big EPS beat of $0.97 with $2.87 in earnings per share, up 48% year-over-year.

The company’s strong quarterly performance was largely driven by increasing U.S. meat prices, another reminder of how far-reaching the impacts of inflation can be. Tyson recently increased its prices to deal with higher costs for labor, transportation, and grains and is seeing heavy demand for its products at this time. The stock also offers investors a 1.86% dividend yield, which is another reason why it's such an attractive option to consider in today’s market.

McDonald’s Corp (NYSE: MCD)

If you’re going to own a fast-food restaurant company, why not own the biggest one in the world? McDonald’s is a name that likely needs no introduction, as the company’s 40,000+ fast-food restaurants located in over 100 countries are instantly recognizable by their golden arches. It’s exactly the type of stock that is appealing in a volatile market, thanks to a beta value of 0.60 and a long history of dividend growth. McDonald’s is actually a dividend aristocrat, as the company has grown its annual payout for 44 consecutive years.

There’s a lot to like about McDonald’s investment in its digital sales channels, which expand the company’s reach thanks to mobile ordering and delivery options. Digital sales were up by 60% year-over-year in 2021 and could be a big contributor to the company’s top-line in coming quarters. Additionally, the fast-food giant has a good chance to deliver strong earnings this year as people head back out to eat following the pandemic. In Q4, the company posted revenue of $6.01 billion, up 12% year-over-year, and saw same-store sales jump by 12.3%. The bottom line here is that McDonald’s is a financially-sound company with a history of dividend growth that is successfully adapting to changing consumer habits, which certainly makes it worth a look at this time.

Hershey Co (NYSE: HSY)

Hershey Co has truly been one of the strongest stocks in the consumer staples sector recently, it's up over 17% over the last 3 months. After the global confectionery company’s latest earnings report, there’s a good chance the sweet gains continue in the near term. Hershey recently delivered Q4 adjusted EPS of $1.69, up 13% year-over-year and exceeding the consensus estimate by $0.08. This quarterly performance tells us that Hershey is navigating issues like supply chain holdups and inflation well, which are some problems that are having a bigger impact on other companies in the food products industry.

Hershey’s products include over 90 brands such as Kit Kat, Reese’s, Heath, Twizzlers, and more. Additionally, the company has been expanding its product portfolio into snack foods through acquisitions, which is another reason why it stands out. The company’s North America Salty Snacks segment grew by 39% year-over-year to reach $159 million in sales, which tells us that this strategy is paying off. Finally, a 1.76% dividend yield makes Hershey a tasty opportunity for investors to consider at this time.

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